24 Feb 2015 07:02
24 February 2015
NMC HEALTH PLC ANNOUNCES THE ACQUISITION OF LEADING GLOBAL FERTILITY CENTRE
NMC Health plc (LSE:NMC) ('NMC' or the 'Company'), the leading integrated private healthcare provider operating across the United Arab Emirates, is pleased to announce that it has entered into an agreement to acquire 86.4% of issued share capital of Clinica Eugin ('Eugin'), a leading global fertility treatment provider based in Barcelona, Spain, for an Enterprise Value of €143m. Eugin is one of the largest fertility clinics in Europe and the established leader in cross-border fertility treatment with patients from the largest Western European countries, as well as the MENA region. The shares are to be acquired from ProA Capital, Eugin's founders and members of the Eugin management team.
The acquisition of Eugin allows NMC to achieve several key elements of its recently updated Group Strategy and is supported by a strong strategic rationale:
· Eugin is a leading IVF centre of excellence with world-leading technology and expertise as well as strong brand recognition
· Brings leading global expertise and technologies in fertility services to NMC's network in the UAE and strongly complements existing NMC women's health services
· Accelerates the development of NMC into a centre of clinical excellence for women's health and will allow NMC to establish a foothold in the UAE medical tourism market
· Significant potential for revenue synergies from growing Eugin's franchise in the UAE and the broader GCC/MENA region
· Transaction expected to be significantly accretive in Year 1 with positive effect on margins and attractive ROIC
· Eugin's strong and experienced management team have agreed to remain at the Company, limiting potential integration risk
Furthermore, in line with NMC's Group Strategy, the Company is also in discussion with multiple parties regarding potential acquisition opportunities in the UAE and GCC region, which would allow NMC to increase its scale across the region as well as further maximise operational synergies. These discussions remain at a preliminary stage and there is no certainty that any of these discussions will lead to additional announced transactions.
Dr. B.R. Shetty, Chief Executive Officer, commented:
"The acquisition of Eugin represents a unique juncture in the history of NMC, combining the leading UAE hospital franchise with a leading global fertility franchise. This transaction offers NMC the opportunity to become the leading integrated women's health provider from fertility through obstetrics and paediatrics in the UAE, and also establishes a foothold for the Company in the growing medical tourism market. The acquisition is expected to be accretive within the first year, and further progresses NMC's strategy of creating centres of excellence across a number of clinical specialties".
Market Opportunity in the UAE fertility sector
Infertility is a growing medical issue within the UAE and, according to Frost & Sullivan ('F&S'), it is estimated that the total fertility rate (number of children per woman) in the country has declined from 2.7 in the year 2000 to 1.7 in 2010, with approximately one in six couples experiencing fertility problems. Furthermore, there is an acute shortage of world class fertility treatment facilities in the country with F&S estimating a supply/demand shortfall of 8,500 IVF cycles in 2013, which represented over 50% of the total demand for IVF treatment in that year.
The infertility market in the UAE is also expected to be driven by the growing medical tourism sector in Dubai. Dubai Health Authority has announced plans to attract 500,000 medical tourists by 2020, generating over $700m in revenues. As of 2014, infertility procedures have also been identified by Dubai Health Care City's (DHCC) recent survey as the leading treatment sought by medical tourists visiting the Emirate.
Information on Clinica Eugin
Based in Barcelona and founded in 1999, Eugin is amongst the largest European providers of fertility treatments, in terms of the number of cycles performed annually, and has the largest egg bank in Europe providing c.10% of donor IVF treatments in Europe. The Company is also the leader in cross-border fertility treatments in Europe. In 2014, the clinic treated more than 5,000 patients and carried out over 8,000 cycles. The clinic offers a full range of fertility treatments including intra-uterine insemination (IUI), in-vitro fertilisation (IVF), intra-cytoplasmic sperm injection (ICSI), fertility preservation and genetic screening.
Over 95% of Eugin's patients are referred from outside Spain with France (55%), Italy (17%), Switzerland (4%), MENA (3%) and the UK (2%) representing the main countries of origin for the patients. Almost all of Eugin's revenues are derived from privately insured or cash pay patients.
Eugin has been majority-owned by ProA Capital since 2010. Eugin's current senior management, Andres Rebage (General Operational Manager) and Dr. Valerie Vernaeve (General Medical Manager), have been with Eugin for several years and have agreed to continue to manage, and retain an investment, in the business.
For the twelve months ended 31 December 2014, Eugin reported revenues of €34.3m, EBITDA of €14.0m and EBITDA margins of 41.0%. As of 31 December 2014, Eugin had gross assets of €59.0m and approximately 230 employees.
Financing and Financial Impact on NMC
NMC will finance the transaction using existing cash and credit facilities. NMC expects to retain post transaction, a net debt to EBITDA level allowing the Company financial flexibility for future growth initiatives. In this transaction, NMC has not utilised any of the funds made available through the US$ 825m facility announced on 16 February 2015.
Excluding synergies, the transaction is expected to be significantly accretive to NMC's EPS.
Additional Information on the Transaction
The Transaction is subject to customary terms and conditions. The transaction was signed and closed simultaneously on 23 February, 2015.
HSBC is acting as Financial Advisor and Evercore Partners is acting as Strategic Advisor to NMC. In addition, NMC is being advised by Allen & Overy and PwC.
NMC Health plc will host a webcast and conference call presentation for investors and analysts today at 14.00 UK time. There will be a short presentation by management covering the FY 2014 results and this transaction followed by a Q&A session.
The call will be hosted by:
Mr Prasanth Manghat, Deputy CEO
Mr Suresh Krishnamoorthy, Chief Financial Officer
Mr Roy Cherry, Head of Strategy & IR
Date and time:
Date Tuesday 24 February 2014
Time 14.00 GMT (09.00 EDT, 18.00 UAE)
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Enquiries:
NMC Health plc
Prasanth Manghat, Deputy Chief Executive Officer
+971 (0)50 522 5648
Suresh Krishnamoorthy, Chief Financial Officer
+971 (0)50 5915365
Roy Cherry, Head of Strategy & Investor Relations
+971 (0)50 667 0184
HSBC
Guy Slimmon
+44 20 7992 2570
Simon Rozas
+44 20 7992 2110
Rahul Khanna
+971 (0)4 423 5169
Evercore Partners
Simon Elliott
+44 20 7653 6000
Media:
FTI Consulting, London
Matthew Cole
+44 (0)20 3727 1101
FTI Consulting, Gulf
Shane Dolan
+971 (0)4 437 2100
About NMC
NMC Health plc group is the leading private sector healthcare operator in the United Arab Emirates, with a nation-wide network of hospitals and operations in the country since 1975. The Healthcare Division currently operates or manages seven hospitals, two day-care patient centres, two medical centres and eleven pharmacies. The company received almost 2.4m patients in 2014. The group also operates a significant UAE wide Distribution business supplying product lines across several key market segments, including: Pharmaceutical, FMCG, Food and Scientific and Medical Equipment. NMC Health plc group reported revenues of US$ 644m in 2014.
In April 2012 NMC Health plc was listed on the Premium Segment of the London Stock Exchange. At the time of its IPO, the group raised funds to enable it to pursue a further growth plan with a number of capital projects for new healthcare facilities in Abu Dhabi and Dubai. NMC Health plc is a constituent of the FTSE 250 Index.
Disclaimer
This document does not constitute, or form part, of any offer or invitation to sell, allot or issue or any solicitation of any offer to purchase or subscribe for any securities, nor shall it (or any part of it) form the basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment for securities.
Forward Looking Statements
Certain information contained in this document constitutes "forward-looking statements," which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Such statements express the intentions, opinions, or current expectations of NMC with respect to possible future events and are based on current plans, estimates and forecasts which NMC has made to the best of its knowledge, but which do not claim to be correct in the future. Due to various risks and uncertainties, actual events or results or actual performance of NMC may differ materially from those reflected or contemplated in such forward-looking statements. No assurances can be given that the forward-looking statements in this announcement will be realised. As a result, recipients should not rely on such forward-looking statements. Subject to compliance with applicable law and regulations, NMC undertakes no obligation to update these forward-looking statements. No representation or warranty is made as to the reasonableness of such forward-looking statements. No statement in this document is intended to be nor may be construed as a profit forecast
HSBC
HSBC Bank Middle East Limited authorised and regulated by the Jersey Financial Services Commission and by the Central Bank of the United Arab Emirates, is acting as financial adviser exclusively for NMC and no one else in connection with the Transaction and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than NMC for providing the protections afforded to clients of HSBC Bank Middle East Limited, nor for providing advice in relation to the matters referred to in this announcement
EVERCORE
Evercore Partners International LLP ("Evercore"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser exclusively for NMC and no one else in connection with the Transaction and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than NMC for providing the protections afforded to clients of Evercore, nor for providing advice in relation to the matters referred to in this announcement.